A federal appeals court has granted House Republicans a delay in their lawsuit seeking to halt certain federal payments to health plans under the Affordable Care Act. That delay buys time for the Trump administration to find a way to avoid throwing the individual insurance market into chaos.
The House Republicans' general counsel filed a motion last month to temporarily hold in abeyance all briefings in the appeal of a federal district court's May ruling in House v. Burwell that the Obama administration illegally compensated insurers for reducing low-income enrollees' cost-sharing responsibilities. A U.S. District Court judge nominated by President George W. Bush unexpectedly held that the payments were unconstitutional because Congress had not appropriated the money.
On Monday, the U.S. Court of Appeals for the District of Columbia Circuit granted the request, directing the parties to file motions governing further proceedings by Feb. 21. That effectively takes the case out of the hands of the Obama administration and transfers it to the incoming Trump administration.
The cost-sharing reductions mandated under the ACA make it affordable for people with incomes up to 250% of the federal poverty level who sign up for silver plans to obtain healthcare without having to pay high deductibles and coinsurance. More than six million exchange plan members receive assistance through the cost-sharing reductions.
If those cost-sharing reduction payments were eliminated, as House Republicans sought, insurers either would have to sharply raise premiums or exit the ACA exchange markets, since the law requires them to reduce cost-sharing burdens for eligible members in silver plans. That would cost them tens of millions of dollars.
The incoming Trump administration and congressional Republican leaders have promised to quickly repeal most of the ACA. But some Republicans and health policy experts fear that any hasty, drastic moves would crash the individual insurance markets.
It was considered very possible that the appellate court would dismiss the case based on lack of standing, since Supreme Court precedent holds that members of Congress generally cannot sue the executive branch over political disputes. But the Trump administration would face a major dilemma if the lower court's ruling were upheld and the payments to insurers were suddenly cut off. Political observers thus speculated that House Republicans would delay or end the litigation and let the Trump administration resolve the issue without disrupting the insurance markets.
The motion last month said the House Republicans and Trump's transition team were discussing potential options for resolving the matter. It added that “there is at least a significant possibility of a meaningful change in policy in the new Administration that could either obviate the need for resolution of this appeal or affect the nature and scope of the issues presented for review.”
Meanwhile, the motion added, the cost-sharing reduction payments to insurers would continue on a monthly basis.
Tim Jost, an emeritus law professor at Washington and Lee University who is an expert on the ACA, wrote in a Health Affairs blog post Monday that the “reasonable course” for Congress now is to appropriate funds to cover the cost-sharing reduction payments for 2017 and 2018, then hold discussions with the Trump administration about withdrawing the case. He argued that the Trump administration should delay the resolution of the appeal and leave the lower court's stay of its order in place.
“These actions will undoubtedly be difficult for some Republicans to accept, but the alternative should be far more distasteful,” Jost wrote.